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The “Secrets” of Executive Session? (Part Two)

Minutes must be taken in executive session if actions are taken. It is preferable for the board secretary to keep a completely different set of minutes for the executive session. Executive session minutes should be approved in the executive session of the next board of directors meeting. If one set of meeting minutes are compiled and approved for open and executive sessions, before those minutes are distributed, the executive session section must be redacted. If no actions were taken in executive session, just noting on the regular meeting minutes that the board of directors entered into executive session should suffice.

In the United States, transparency of government is in most circumstances a good thing. Within the governance of a HOA, transparency is beneficial to the entire membership as well; as noted previously, transparency only to a degree that is beneficial and not damaging to the HOA. Legal matters ‘or potential legal matters’ must be dealt with discreetly for practical reasons, such as a contract dispute with the landscaper. It is not beneficial for the landscaper to hear about contract issues from someone who was just sitting in an open meeting. It is certainly not beneficial for a member who is delinquent in paying their assessment to hear that this matter was discussed in an open meeting. Discussing this in an opening meeting could be a violation of debt collection statutes.

Executive session used to avoid unpleasantness. It is agreed that it is appropriate that certain issues should only be addressed in executive session. Executive sessions should never be utilized to avoid or delay pain.

There is an association in Florida that had a major sinkhole some years ago. Sinkhole damages are typically not covered by the traditional insurance policies held by HOAs. This sinkhole caused close to half a million dollars in damage. The homeowner association had roughly half that amount in reserves set aside for other upcoming and needed capital repairs.

The board of directors met in executive session to address the problem. While the initial executive session to discuss the gravity of the situation was probably prudent, what followed was not. The board proceeded to have more meetings in executive session without effectively communicating the magnitude of the problem with the membership.

When the board finally communicated the magnitude of the problem to the membership, the membership was already worked up into a frenzy for lack of knowing anything. This board of directors should have been upfront with everyone as soon as the facts were clear about the severity of the situation and the impending financial burdens that would be coming to all the homeowner association members in the form of increased dues and a special assessment. Even if the entire picture was not clear at first, a simple acknowledgment by the board of directors to the membership that this matter was going to be expensive would have gone a long way in trampling down the fervor that occurred when the funding deficiency had to be dealt with.

By this board refusing to answer questions and going into executive session it gave the impression something was amiss. Amiss meaning the board of directors had done something wrong. The board of directors had done nothing wrong except were overly concerned about how upset the membership would become when the looming financial situation had to be disclosed. What was ridiculous about these concerns is that everyone in the membership knew there was a huge mess, because it was in the main parking area at the entrance of the homeowner association. And no one could honestly believe that what they saw was not going to be expensive to fix. However, by poor communication and holding meetings in executive session, it made the matter ten times worse.

What this board of directors should have done is immediately let the membership know about the sinkhole, and that the board was working diligently to resolve the matter as soon as possible. That an insurance claim had been filed (a claim which was eventually denied.), and no matter what happened this incident would probably be a financial burden on the HOA and to the individual membership. While the truth may be painful, the truth is a powerful weapon. Because the facts are simply the facts. No matter what happened the board of directors could have always come back with, “we told everyone about this when it initially happened and that it was going to be expensive to correct.”

Executive sessions should not be used to play games with troublemakers in the membership. While this is not a common problem, and the author of this blog has only come across this situation once, it is worthy of mentioning here. Twenty-five years ago, there was a self-managed HOA that hired the author as a subcontractor to do limited work on a matter within the community.

This board of directors held their board meetings at a local library branch. The author arrived at the meeting at 6:45 P.M. prior to the start time of 7:00 P.M. The board of directors was already present with one member of the HOA sitting in the back row of chairs. There were around fifty chairs set up, but it was just the author and the lone HOA member in attendance, besides the members of the board. The agenda was distributed, and the author was not noted any place within the agenda, nor the topic that the author had completed work on. However, there were seven different points on the agenda where executive session was noted between other ordinary HOA business.

The board meeting was called to order and routine housekeeping was handled and the board went into executive session. The author and the lone member got up and waited in the hallway until the board went back into open session. While waiting in the hallway, the lone member felt the need to introduce himself to the author and give his prospective on the homeowner association, the board of directors, the membership, his neighbors, then he began to broach the topic of national politics. To say this man was a little negative is like saying Antarctica is a little chilly.

After fifteen minutes the board meeting was in open session again. Another insignificant item was addressed on the agenda and the board went back into executive session. So, the author had to go wait in the hallway again with “Chuckles the Clown.” The author was astonished that “Chuckles” could go over the same ground again about the HOA, the board, his neighbors, etc., etc., and be even more negative and downbeat than he was the first time in the hallway. It had only been several minutes since he had given his unsolicited negative view of the world the first time and somehow this view had dropped even lower the second time in the hallway.

After twenty-five minutes the board meeting was once again back in open session. Another minor point was covered on the agenda and the board went into executive session again. Fortunately, they asked the author to stay. This was unusual because there was nothing to the level of executive session in the author’s report. However, the author was more than happy to not have to go back out into the hallway on a sabbatical with “Chuckles the Clown.” As a matter of fact, the author was going to go to the bathroom to try and duck out on “Chuckles,” but in all likelihood, “Chuckles” would have followed him into the bathroom to keep spreading the sunshine.

In about fifteen minutes the author went through the report and concluded. The board, which were extremely nice people, began to ask questions of the author on other topics, none of these topics even remotely dealing with homeowner associations. So, in about another fifteen minutes they conclude with the author, and the board president walks the author to the door. So, the author being more inquisitive at this early age had to ask what was going on with all the executive sessions and essentially burning time. The board president said, “we do this because Jack (Chuckles the Clown) comes to every board meeting and at open discussion gives everybody a hard time. Members no longer come to the board meetings because this guy is just awful to deal with.” The board president paused, leaned in, and kind of whispered, “that is why we run the meeting up until open discussion is five minutes before 9:00 P.M. when the library closes. We all have to be out of here by then, and that way we only have to listen to five minutes of his (expletive).”

Again, the entire board of directors were very nice and reasonable people. They were not doing this as some type of petty or vengeful act, they believed this was the only way to effectively deal with this member who was continually ridiculing their actions and running everyone else in the membership down. The proper way to have handled this member would have been through Roberts Rules of Order and allowing him only three minutes to discuss relevant homeowner association topics during open discussion. If “Chuckles” became abusive or kept bringing up the same topic each time he came to open discussion, that too can be dealt with more effectively through Roberts Rules of Order than having marathon board meetings. It would definitely be much more time-efficient for everyone involved.

Executive sessions are a necessary aspect of any deliberative assembly. Not every single member will be happy that they are not “in on the secret,” but that is just how it is when it comes to dealing with sensitive topics. However, transparency, or as much transparency as possible, is preferable when dealing with the membership. There is an old saying about transparency being the ultimate “default” position when it comes to running any organization. A homeowner association operating under this maxim will operate much more efficiently and have a happier membership. WDMC

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Legal Disclaimer: This blog is presented solely for entertainment and educational purposes. The blog’s author is not an attorney, nor offering legal advice. The blog’s author and publisher are not offering or presenting this work as legal or any professional services advice or guidance. State statutes regarding homeowner associations can vary from one state to another so state statutes will need to be reviewed and may conflict with the material found within this blog. Every HOA is different, and the advice and strategies contained herein may not be suitable for every situation. The reader should always seek the services of a competent and experienced HOA attorney who specializes in HOA law.

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